Problem

Stock Dividend Bower Corporation reported the following information: common stock, $2 par; 120,000 shares authorized; 65,000 shares issued and outstanding.

Required:

1. What is the appropriate journal entry to record a 5% stock dividend if the market price of the common stock is $45 per share when the dividend is declared? For a compound transaction, if an amount box does not require an entry.

2. What is the appropriate journal entry to record a 35% stock dividend if the market price of the common stock is $45 per share when the dividend is declared?

3. How do these transactions affect Bower's total stockholders' equity? Total stockholders' equity is by these transactions.